CAPE TOWN, Feb 25 (Reuters) - South Africa's government said in its annual budget on Wednesday that it would propose a "principles-led" fiscal anchor later this year, rather than a numerical target, as part of efforts to restore the health of public finances.
The National Treasury said details of the proposal would be informed by consultation and announced at its mid-term budget, which is normally presented in October or November.
The Treasury has been on a mission to boost investor confidence in Africa's
biggest economy by reining in debt and undertaking reforms to lift the potential growth rate.
The country's debt burden has risen sharply, tripling from 23.6% of GDP in the 2008/09 fiscal year to a projected 78.9% this year.
Growth started to pick up last year but is estimated at just 1.4% in 2025 and 1.6% in 2026, below the level needed to meaningfully reduce one of the world's highest unemployment rates.
The Treasury said the fiscal anchor would "maintain the gains of fiscal consolidation without resorting to painful spending cuts or tax increases".
A fiscal anchor - which is formal and often legislated - sets medium- to long-term targets to guide government spending, borrowing, and revenue collection with the aim of fostering economic credibility.
The budget showed the Treasury now expects a consolidated budget deficit of 4.0% of gross domestic product (GDP) for the fiscal year that starts on April 1, up from a previous forecast of 3.8% of GDP.
South Africa's gross debt-to-GDP ratio is now seen falling to 77.3% of GDP in 2026/27.
The Treasury presented higher revenue estimates this fiscal year, helped by steady economic growth and commodity price increases.
(Reporting by Kopano Gumbi, Sfundo Parakozov and Wendell Roelf;Additional reporting by Anathi Madubela in Johannesburg;Editing by Alexander Winning)
